Honda developing Indian small car to vie with Suzuki image

Honda Motor Co., Japan’s second- largest carmaker, is developing a new small car for India as it aims to challenge Suzuki Motor Corp. in a country where people prefer compacts.

“There is a worldwide shift to relatively smaller and cheaper cars,” Chief Executive Officer Takanobu Ito told reporters in New Delhi today. “We want to offer products to as many customers as possible.”

Tokyo-based Honda started selling the Jazz hatchback, its first compact for India, in June. Toyota Motor Corp. and Nissan Motor Co. also plan to sell small cars in India, where such vehicles accounted for 73 percent of sales in the year ended March 31, according to the Society of Indian Automobile Manufacturers. Suzuki, which offers seven hatchbacks, is the maker of half the cars sold in India.

Honda plans to introduce a car smaller than the Jazz within two to three years to target India and Thailand, Asian Honda Motor Co. President Fumihiko Ike said last month. The car would be sold in India at a price equivalent to the average annual salary, he said.

Honda’s 2009 sales in India will fare better than an initial estimate for a 20 percent to 30 percent drop, the company said last month.

Carlos Ghosn, chief executive officer of Renault SA, said yesterday that the company’s ultra-low cost car being developed with affiliate Nissan Motor Co. and India’s Bajaj Auto Ltd. will be introduced in 2012, a year later than planned. Honda doesn’t intend to introduce similarly priced cars, Ito said.

Nissan, which is building a plant in India in partnership with Renault, plans to introduce more models in India as the local auto market may triple in 10 years, Ghosn said earlier this week.

Source: Bloomberg